Introduction
Gold is much more than a metal for the Indians, it is an emotion for them. Buying gold is always auspicious for Indians in various forms like physical gold, gold bonds, digital gold and SGBs. Indians mainly purchase gold during festivals or marriage ceremonies. The love and fascination regarding this auspicious metal never cease. But everyone should be aware of the regulations and limits regarding the storage of gold in households. People tend to spend on gold because it is considered auspicious and a mode of investment.
Background
In 1968, the Gold Control Act was adopted by our nation. The citizens were prohibited from possessing more gold than was allowed under this law. However, this law was revoked in 1990. There are now no limitations on the quantity of gold that may be held in India, but the owner must possess proper proofs and documents pertaining to gold.
The Present Rules and Regulations
In India, there is technically no restriction on the amount of gold jewellery that can be owned.
An income tax announcement dated May 11, 1994 states that married women in India are permitted to keep up to 500 grams of gold jewellery and decorations without providing any documentation. Unmarried women are only permitted to keep 250 grams of actual gold in their homes. Men are permitted to keep up to 100 grams regardless of marital status.
Anything kept above these limits without required income proof will be investigated and possibly seized.
However, according to Chartered Club, a tax-related information platform, gold coins and bars can be seized even if they fall within the specified limit if there are no necessary documents to prove the ownership.
The determination of tax on gold investment is based on the holding period, i.e. the taxpayer’s holding period. If gold is held for more than three years, it is subject to Long Term Capital Gain (LTCG) taxation at 20 per cent and short-term capital gain taxation, depending on the investor. Taxable at the tax slab level. Gold ETFs/Gold MFs, like physical gold, are taxable.
In the case of bonds, however, they are tax-free if held until maturity. If the bond is sold before maturity, it is subject to a 20 per cent tax.
Thus, even though the majority of Indian households buy and possess gold in various forms, they should be aware of the legal restrictions on the amount they can acquire.
